A Carrefour hypermarket in Changzhou, China.

PARISCarrefour SA is upping the ante in non-food categories including textiles thanks to the integration of omnichannel models, chief financial officer Pierre-Jean Sivignon told analysts and journalists during a conference call to discuss its fourth quarter and full-year sales on Thursday.

Sivignon said the acquisition last year of French online pure player Rue du Commerce is helping the retailer, the world’s second largest after Wal-Mart Stores Inc., to improve its game both on- and offline. This could ultimately benefit its larger French stores, which continue to suffer from the competitive environment and depressed consumption in France, Carrefour’s largest market.

Sales in hypermarkets, which represent just over half of Carrefour’s domestic sales, fell 2.6 percent to 20.82 billion euros, or $23.05 billion, last year. Revenues from domestic supermarkets dropped 0.9 percent to 12.95 billion euros, or $14.33 billion, while the growing convenience and other store formats posted a 3.2 percent sales increase to 6.37 billion euros, or $7.05 billion.

In recent years, rebalancing its store footprint to become less dependent on the hypermarket model has been key to the retailer in several markets, notably France and Spain, and also allows it to attract a younger, more urban consumer base.

But Sivignon also sees omnichannel as particularly beneficial to the hypermarket format in the future. “We are spreading our wings gradually in non-food via the net. This will help the [hypermarkets] on non-food,” he said.

Carrefour recorded online sales of approximately 1 billion euros, or $1.11 billion, last year, the majority of which came from Rue du Commerce, said Sivignon.

“We are gradually merging the capabilities of Rue du Commerce with the non-food of our French stores,” he said. “Everybody was asking us, ‘Why did you buy Rue du Commerce?’ The action in non-food is taking place to some extent now on the web, so that’s why we needed a pure-play module in our assortment. We now have it.”

While food represents approximately 80 percent of Carrefour’s total business, and saw sales improvements in all markets in 2016, non-food is still essential to the retailer’s stability, and a category where it has been underperforming.
“Non-food is essential because it’s clearly a traffic builder. In any store where you don’t have non-food, you lose traffic and absolutely impact negatively your food business,” Sivignon explained.

Carrefour is reviewing its non-food assortment and merchandising in stores, introducing click-and-collect services and training salespeople in the category, of which textiles are a key element. The retailer has remodeled around half of its French hypermarkets. “[In] textiles, if you look at the industry, it has been a difficult year for just about all of the players,” said Sivignon. “The question is: what are we doing about it? We have quite a bit of work on assortments.”

He sees such strategies as key in markets beyond France, too. “We see the crucial importance of non-food in a country like Brazil, where you don’t really have specialists as such to compete against,” he said.

Sales for Carrefour SA grew 4.2 percent in the fourth quarter, its best quarterly performance of 2016, boosted by strong sales growth in Europe and Latin America.

Revenues in the three months ended Dec. 31 reached 23.37 billion euros, or $25.21 billion, as petrol sales and currency impacts had positive effects on overall business. Excluding petrol and calendar effects, Carrefour’s organic sales for the period gained 3 percent.

The retailer’s international sales rose 4.5 percent on a like-for-like basis, driven especially by strong business in Spain and Brazil, where a favorable currency impact boosted sales. While like-for-like sales in China fell 4.3 percent in the fourth quarter, the company observed that conditions there had improved for a second consecutive quarter as it modified its strategy to cater to changing consumer dynamics.

Total international revenues were up 7.1 percent to 12.61 billion euros, or $13.6 billion, while in France, sales increased 0.9 percent to 10.76 billion euros, or $11.61 billion. The French business grew 0.7 percent on a like-for-like basis. Dollar figures are calculated at average exchange for the period to which they refer.

Carrefour opened 123 new stores net during the fourth quarter, bringing its total store count to 11,935 at year end.

For the full year, Carrefour’s sales fell 0.7 percent versus 2015 to 85.7 billion euros, or $94.86 billion. International sales declined 0.3 percent to 45.57 billion, or $50.44 billion, while French revenues dropped 1.2 percent to 40.13 billion euros, or $44.42 billion. On an organic basis and excluding petrol and calendar effects, group sales advanced 3 percent.

“Overall, Carrefour turned in a solid sales performance both in the full year as well as in the past quarter, confirming the relevance of our multi-format model, predominantly based on food as well as on the rising strength of an omnichannel approach,” said Sivignon. “This sales performance constitutes the fifth consecutive year in which Carrefour has posted a rise in comparable sales. It’s also the best yearly performance over that same period of five years.”

Sivignon confirmed that the company would be in line with median consensus on earnings before interest, tax and depreciation for 2016, at approximately 2.39 billion euros, or $2.65 billion.

Just after 1p.m. CET, Carrefour shares were trading down 0.7 percent at 22.77 euros, or $24.36 at current exchange, compared with Wednesday’s closing price.